Notes have the exclusive ability to mint and redeem DYAD. They ultimately gate DYAD supply and protocol TVL, which define the numerator of the Kerosene Deterministic Value equation.
The more Kerosene a given Note accumulates and deposits, the less exogenous collateral it needs to deposit to mint DYAD (down to 1:1, exogenous collateral : DYAD) and the further it can get from the 150% liquidation threshold (no limit to Kerosene’s power here). Kerosene can be acquired by providing liquidity in certain pools. The farming of Kerosene is gated to Note holders. Note holders can either deposit collateral and mint DYAD, or buy the necessary DYAD from the market and provide liquidity. The competition for usage of surplus collateral in the system via the Kerosene token is what drives the flywheel. If Kerosene ever trades below its deterministic value in the market, an arbitrage opportunity opens up.
